Jack Myers' Think Tank: Tim Armstrong, David Levy, Carl Fremont, George Kliavkoff On The New Economics Of TV Content

135 million people consumed 24 million minutes of video in August through 9.1 billion online and mobile streams, says Digitas Vice President Jordan Bitterman. Assuming one-third of those videos (an estimated 40% were through YouTube) are relevant and appropriate for advertisers, that's eight million video minutes available for advertisers with the amount growing exponentially each month, and the percentage of ad-appropriate content increasing as well.

George Kliavkoff, president of NBC Universal Interactive, believes "there has been a tectonic shift in the past 16 to 18 months in the way media companies have embraced opportunities and challenges [of broadband video]. It started with the opportunity to stream shows and there was great concern it would be disruptive. But," he told Jack Myers Media Business Report, "it turns out full-length streaming of TV series drives incremental viewing of the series [on TV]." Kliavkoff says NBC Universal is now embracing the inevitable growth of multi-platform distribution for its network series and is making series available on NBC.com, at the new destination site Hulu.com, and through syndication to multiple sites. "The idea of trying to tell someone when and where they can watch is over," he agrees.

"Ownership of content is key," says David Levy, president of Turner Sports and Turner Entertainment Sales & Marketing. "We can put NASCAR content anywhere it's valuable to audiences and advertisers because we're in control of the content." For series like "The Closer," although it's a TNT product, Turner has to buy digital rights from the studio and the issue is how much they can pay relative to online reach potential. "I'm using it more as marketing and packaging tool for advertisers who are demanding multi-platform integrated deals," Levy says. "While there might be challenges," he adds, "television is still the largest reach vehicle out there."

Tim Armstrong, Google's president of advertising and commerce for North America, agrees "television networks and studios are best positioned. It's incredibly hard for amateurs to compete with 'House.' But," he points out, "if networks distribute with a product-centric approach rather than a traditional 'pipe mentality,' they'll have a better multiplatform experience. When it's a jump ball scenario with all pipes open at all times, you need great product. When people can choose and share content, it puts pressure on the quality of content."

While Kliavkoff points out "for cable networks a long-term sustainable business that will replace the dual cable revenue stream has not yet presented itself," Armstrong suggests "people are worried about making the same amount of money on content, but if you could connect all the great content with all the people who would like that content, the world is much larger. People would watch more content if it fits into their schedule, and getting content to the right users with a business model attached is highest scale success you can have." Kliavkoff's focus is figuring out the successful models and he says the approach to date has been to embrace everything. "The fact we have been able to launch Hulu successfully is a realization of one of our primary objectives," he says.

But Carl Fremont, global media director for Digitas, suggests the issues go beyond distribution and availability. "We need to be thinking about new formats for video advertising," he told Jack Myers Media Business Report. "We've always thought of content as one-way but now we're in a new era where content creators and advertisers are stimulating dialogue and discussion, and consumers will take our content and forward it, mash it up, alter our messaging and engage with advertisers. We have to create user interaction and engagement. That's the future."

To adapt to this new model, Fremont believes, "we need a different breed of commercial producers who are open to experimentation and are not just creating an award-winning portfolio. Awards will be measured by consumers voting through their responses -- not by the industry voting." And at agencies, he argues, creative and media need to be working together. "There is much more blurring of lines between content and creative. How can you be creative if you don't have access to creators and distributors of content?" he asks.

Kliavkoff points to mobile video content as another emerging issue and opportunity. "Mobile is a huge opportunity in front of us with screens and networks getting better. We should be in a preeminent position to program for that screen, but today in the U.S. the mobile video business models are 100% broken. If mobile video is not taking off, it's because carriers have set up closed networks with closed walls. They distribute 21 percent of revenue to aggregators, 70 percent to carriers, and content providers receive only nine percent of gross revenue. We want to work with the carriers and help them realize they can make the pie larger by taking 20 percent instead of 70 percent."

"We have lots of challenges as it relates to video content," Fremont acknowledges. "We are nascent in the learning curve, but [we know] the greatest change is going to be the impact of streaming online video on traditional broadcast networks. This is a really interesting time." Fremont, Kliavkoff, Armstrong and Levy spoke on "Economics of the New Television Marketplace" at a JackMyers.com Breakfast event sponsored by Teletrax. I commented at the event, "the next three to five years will be the most dynamic, interesting and exciting of your career, whether you are in your 20s and just starting out or in your 60s and have only 20 to 30 more years of being active."